Employers urged to find reforms
Spurred by a discussion with Christopher F. Koller, the state’s new health insurance commissioner, leaders of several major local companies are working with benefits consultants Marsh and Mercer to reestablish the Rhode Island Business Group on Health.
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The purpose of the group, said Christopher R. Coté, a vice president at Marsh, would be to ensure that employers – the main payers of health insurance – are actively involved in state health policy discussions, so they can speak directly about how rising costs, flaws in the health care delivery system and other issues affect them.
“It’s about helping Chris Koller set his agenda,” Coté said in an interview. “It’s a good time to do it, because he’s just starting. I think he can learn a lot from the businesses.”
Koller said he wants employers not only to help set priorities for reform, but to help make those reforms happen by leveraging their clout at the State House.
“I’ve seen (Citizens Bank CEO) Larry Fish do that for Citizens,” Koller said. “When he comes up, people pay attention.”
The idea to revive the Business Group on Health came up at an April 8 event sponsored by Marsh and Mercer. Over breakfast, about 60 corporate leaders, human-resource managers and experts talked about rising health insurance costs and what it will take to contain them.
Susan Connolly, national leader of Mercer’s health care and group benefits specialty practices, gave a presentation showing that since 1998, health costs have risen much faster than inflation – by 6.2 to 14.7 percent each year, 7.5 percent last year.
Employers’ response, Connolly said, has been to increasingly shift costs to their workers. As of last year, 27 percent of HMO plans sponsored by large employers included an office-visit co-pay of $20 or more, and 46 percent included a hospital deductible, Connolly said.
To try to slow the rise in costs, Connolly said, employers have also adopted “health management” programs such as nurse advice lines – to take care of problems that don’t require a doctor or an ER visit, health risk assessments and disease management programs.
“The challenge, of course, is to get employees to use these programs,” Connolly said.
Also increasingly popular, Connolly said, are so-called consumer-driven health plans, in which workers are encouraged to use their health care dollars more wisely and sparingly. As of last year, 49 percent of large employers said “consumerism” was part of their health strategy, and 12 percent offered high-deductible, consumer-driven plans.
Some of the greatest promise, however, is in collective purchasing by employers, Connolly said, especially with pharmacy benefits. Another emerging strategy, “care-focused purchasing,” is gathering data on providers’ performance with the goal of creating tiered systems that reward those who provide the best and most cost-effective care.
In the short run, Connolly said, such efforts can curb premium growth by 12 to 16 percent, she said. In the long run, the projected impact on providers’ behavior – a true “reengineering” – could save 30 to 40 percent, she said.
Koller, in his first public appearance since taking his job last month, lauded many of the initiatives described by Connelly, but also tried to expand the range of the discussion.
A big part of why health care is so expensive, Koller said, is that health plans’ payment structures encourage hospitals to provide costly services, and don’t include enough incentives for efficiencies such as large physician practices.
From that perspective, Koller said, employers’ growing reliance on “consumerism” isn’t enough. “If you just say, ‘Good luck, God bless. Here’s a couple of Web tools,’ I’m not sure we’re going to change the performance of hospitals, for example,” he said.
Along with leveraging their own buying power, Koller said, employers need to get involved in the public policy process, and help decide such tough questions as how much inequality of access is OK, or whether older and sicker workers should have to pay more.
“We need the participation of employers,” Koller said. Without them, he said, policy debates easily become “a real insider conversation.” But “when you get someone who’s actually paying the bill, it totally changes the dynamic.”
Koller’s invitation did not fall on deaf ears. During a Q&A session, Herb Gray, vice president for human resources at Cranston Print Works, asked whether the Rhode Island Business Group on Health should be revived, and the idea took off immediately.
Coté offered to coordinate the project, and lawyers from Nixon Peabody in Providence also signed on. Since then, Bob Carniaux, senior vice president for human resources at Hasbro, and executives at Ocean State Job Lot, Wardwell Braiding and Gilbane Construction have come onboard.
